Trade the Balance of Payments and Exchange Rate Policy in Developing Countries

Book DescriptionThis book is a synthesis of the author?s ideas and research concerning the monetary consequences of trade flows, and the relevance of conventional balance of payments adjustment theory. These ideas are considered mainly in the context of developing countries, many of which suffer from deep structural difficulties and severe foreign exchange shortages. Mainstream economic theory regards the balance of payments to be self-adjusting, meaning that the impact of the balance of payments on the growth and development process is neither considered nor analyzed. In contrast, the author emphasizes the importance of integrating monetary considerations into trade theory and argues that the balance of payments consequences of trade policy need to be carefully addressed. This approach has a number of implications for important issues such as: the sequencing of trade liberalization; the role of the exchange rate in equilibrating the balance of payments; the case for...